Rightmove downgrades 2026 price forecast amid market cooling

Rightmove downgrades 2026 price forecast amid market cooling

Rightmove has revised its 2026 housing price forecast downward, predicting stagnation or a slight fall after a sharper than usual August price drop and a surge in homes for sale, signalling increased market caution.

Rightmove reported that the average asking price for newly listed homes fell by 2.0% in August, a larger decline than the ten-year average of 1.3% for this month and the biggest since 2018. This drop comes alongside a 12-year high in the number of homes available for sale at this time of year, contributing to sellers lowering their price expectations amid subdued buyer activity.

The property portal now predicts that average asking prices for the year 2026 will either stagnate or fall by up to 2%, a significant revision from its earlier forecast of a 2% rise. The average asking price is currently 1.0% lower than the same time last year, marking the largest annual decrease since December 2023.

Rightmove’s analysis of current market conditions

Rightmove’s report highlights that the traditionally quieter summer period, combined with the increased supply of homes, has pressured sellers to price more competitively from the outset. According to Rightmove property expert Colleen Babcock, sellers who adopt realistic pricing strategies improve their chances of finding buyers and completing sales successfully.

Some sellers are also reportedly making lower offers on their onward purchases to offset accepting reduced offers on their own properties. Despite buyer activity remaining around 10% below last year’s levels, Rightmove noted a 5% increase in buyer demand since the appointment of Prime Minister Andy Burnham in late July, contrasting with a 2% decline during the same period last year.

Rightmove’s statement attributes this modest increase in buyer interest to improved market optimism following the new Prime Minister’s assurances against property tax changes in the upcoming October Budget. However, elevated mortgage rates continue to challenge buyers, with the average two-year fixed mortgage rate rising to 5.09% from 4.92% the previous month. The portal also suggests there may be some downward movement in mortgage rates in the near future.

Implications for landlords and letting agents

For landlords and letting agents, the revised price forecast and current market dynamics have several practical implications. The increase in homes for sale and the downward pressure on prices could signal more opportunities to acquire properties at lower prices, particularly for buy-to-let investors seeking bargains. However, the subdued buyer demand and higher mortgage rates may also slow sales and affect property values in the short term.

Letting agents may see changes in landlord behaviour, with some sellers potentially opting to rent out properties rather than sell immediately if market conditions remain uncertain. This could increase rental supply in some areas, potentially easing rental demand pressures but also impacting rental yields depending on local market conditions.

Landlords should also be aware that the market’s uncertainty, influenced by mortgage rate fluctuations and political developments, could affect tenant demand and rental pricing strategies. Maintaining flexible tenancy terms and monitoring local rental market trends will be important for portfolio management.

Market uncertainty and what landlords should monitor

The outlook remains uncertain due to several factors. The upcoming October Budget could introduce changes affecting property taxation or housing policy that might influence market sentiment. Mortgage rates, while currently high, could shift depending on economic conditions and Bank of England decisions, affecting affordability for buyers and potentially rental demand.

Geopolitical uncertainty and broader economic trends also contribute to unpredictability in the housing market. Landlords and agents should stay informed about regulatory changes, tax policies, and economic indicators that could impact property values and rental markets.

Key considerations for landlords amid market changes

• Review property acquisition strategies to take advantage of potential price reductions while considering financing costs.
• Monitor local market supply and demand to adjust rental pricing and tenancy terms accordingly.
• Stay updated on government announcements, especially the October Budget, for any changes affecting property taxation or rental regulations.
• Maintain thorough records of property valuations, tenant communications, and compliance activities to support decision-making and regulatory adherence.
• Consider the impact of mortgage rate fluctuations on tenant affordability and potential rent arrears risks.

Supporting landlords through market shifts with TLA

The Landlord Association (TLA) offers membership resources designed to help landlords and letting agents manage their portfolios effectively during periods of market uncertainty. Through TLA’s compliance materials and guidance, members can stay informed about regulatory changes and market developments impacting property management.

TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is being developed to assist landlords and agents in organising property records, managing rental documents, and recording key actions such as inspections and communications. This centralised approach can help landlords maintain evidence of compliance and adapt to evolving market conditions with greater confidence.

Exploring TLA membership and accessing ORBIT BETA can provide practical support for landlords navigating the challenges of fluctuating property prices and changing market dynamics.

Looking ahead, landlords should prepare for potential shifts in market activity this autumn, keeping a close eye on mortgage rates and government policy announcements that will influence both sales and rental sectors.

Sources: Landlord Today